Albuquerque’s New City Council Poised to Implement Innovative Energy Financing

Nov. 2009 - When Albuquerque's new City Council first convened in December, it was poised to create a city-wide “Renewable Energy Financing District,” allowing property owners to finance renewable energy systems such as photovoltaic and thermal solar through their property taxes. The Ordinance creating the District, O-09-87, was deferred through the month and is now scheduled for final action at the Council’s January 4th meeting.

It became possible when the State Legislature passed the Renewable Energy Financing District Act (NMSA §§ 5-18-1 to -13) last spring, authorizing governing bodies of counties and municipalities to form such Districts that may impose special assessments and issue bonds for that purpose. The purpose of Renewable Energy Financing Districts is to remove the disincentive of large upfront costs in the many thousands of dollars for installing renewable energy systems. Instead, as a newly formed governmental entity, the District is authorized to issue special assessment bonds to finance the initial installation, and the property owner—residential or commercial—pays off the loan over a 20-year period, just like a mortgage. The City’s analysis of the District scheme lists the following benefits:

• Little to no upfront costs of financing renewable energy systems.
• Easy repayment as part of property owner's annual property tax bill.
• Fixed interest rate for the entire financing period (max maturity 20 years).
• The repayment obligation stays with the property if sold.
• The cost of renewable energy from installed systems is fixed.
• Lower energy use translates directly into reduced greenhouse gas emissions and helps secure our energy future.

Upfront installation costs had already been reduced by State and Federal tax credits which vary with the type of installation and the recipient, whether residential or commercial. There is no fiscal impact on taxpayers or the City, as the cost of the improvements is allocated entirely to the property owners via the “Renewable Energy Improvement Assessment” that the owners pay back over time. The program is entirely voluntary. After a property owner files a complete application and the District approves the property’s inclusion, the District imposes the Assessment on the property, including bond issuance costs, debt service and administrative costs, and records a lien. As the Renewable Energy Financing District idea spreads (the first in New Mexico was Santa Fe County, in October), one looming question is how far such independent solar and other renewable installations will be allowed to compete, in effect, with PNM. As detailed in a November 1st Santa Fe New Mexican article by Staci Matlock (“Santa Fe County takes initiative in renewable energy”), the New Mexico Public Regulation Commission (PRC) has developed rules requiring PNM and other utilities to pay customers when their own solar systems produce more energy than the customers draw from the grid, known as “net metering” (see http://www.nmprc.state.nm.us/ energy/solar.htm). Matlock noted that these rules have given more forward-looking energy paradigms like distributed generation at least “a foot in the door.” But PNM has wanted to draw the line at third party renewable generators selling their power to its customers, an issue currently before the PRC, so we should stay tuned for an imminent regulatory and, quite likely, a legislative response in which the Sierra Club will doubtless be strongly involved. Readers interested in how PNM and the PRC are grappling with these and related issues should definitely check out PRC Commissioner Jason Marks’ Update at http://www.jasonmarks.com/energy/pnmrpp09.pdf by Patrick Redmond.

To get involved with the Central Group, please contact Patrick Redmond predmond121@gmail.com